EUR 850.00 For Business Accounts Only

Morningstar | Experian’s Growth Slows a Bit in Fiscal First Quarter

Experian saw its organic growth slow a bit in the fiscal first quarter, with revenue growth excluding currency effects and acquisitions growing 6% year over year. This represents a slowdown from the last fiscal year, but this quarter’s growth rate is more in line with our long-term expectations. We will maintain our GBP 2,090 and $26.50 fair value estimates and wide moat rating.

Results in North America remain good, with 8% year-over-year growth excluding acquisitions. The core credit bureau business continues to perform well. Further, the consumer business is maintaining its momentum with 9% growth on the same basis, as Experian shifts its business model in this area. We’re encouraged by the successful transition management has made and think Experian’s decision to compete with new entrants in this area, as opposed to partnering like its peers, could be the more value-creative path over the long run.

Currency headwinds held back reported results in other regions, but Latin America was up 9% year over year excluding currency effects and acquisitions. In the long run, we still believe that replicating the company’s business model in emerging markets is the most value-creative growth opportunity for Experian and its peers. However, on this front, a 1% year-over-year decline excluding currency effects and acquisitions in the EMEA/Asia-Pacific region is a bit discouraging, but the meager growth this quarter appears to be largely the result of a difficult comparable.

The U.K./Ireland region was flat year over year excluding currency effects and acquisitions. Here, too, the company faced a difficult comparable. We are encouraged by the trend in the consumer business in this region, which returned to a very modest amount of growth on an organic basis. This region is earlier in its transition to the company’s new consumer model, and the quarter provides some signs that Experian will eventually see a recovery in line with the company’s experience in North America.